An informed and thought-provoking analysis of what lies behind the headlines and headaches of business ethics and corporate social responsibility

Thursday, April 24, 2008

Fat chance for CSR

Regular readers of the Crane and Matten blog will be aware of our ongoing interests in social responsibility and self regulation in the food industry. Few subjects arouse as much debate as the stuff we put on our plates every day, the things that make us fat or thin, healthy or unhealthy … and of course the role that corporations play in enabling or preventing us from making informed and sustainable choices about food consumption.

So it is with some interest that we can report that this week saw the introduction of the first bill in the US that requires food outlets to display the calorie contents of their products on menus (see the recent newspaper article in The Guardian about this for more details). Yes, New York City has defied the vigorous campaigning of the fast food industry to put in place regulations that will ensure that customers in the city will no longer have to scrabble through the desultory rack of in-store nutrition leaflets or wade through the games and promotions on the corporate website in order to work out just how many calories that bucket of fried chicken and fries is going to pack.

Regulation of course is somewhat anathema to some (but not necessarily all) in the CSR world. Proponents of social responsibility typically promote self-regulation by business as a preferable alternative to government-imposed legislation. But in the hard fought battle of the bulge in New York, the city’s restaurant chains have been reluctant to introduce more far reaching CSR initiatives that may have staved off today’s regulation.

So from our perspective, the new legislation represents something of a mixed blessing. Sure, customers should be able to make informed decisions on the basis of readily available, easily comparable, and ultimately relevant, information about their prospective purchases at the point of sale. The New York legislation clearly has the potential to deliver this, providing restaurant chains live up to the spirit as well as the letter of the law. And, most importantly, such information is critical to the enabling of what we discuss under the label of ‘consumer sovereignty’ in our business ethics text. Basically, as the INSEAD professor Craig Smith has shown, the point is that ethical exchanges require consumers to have appropriate capability, information and choice in making their purchase decisions.

But, on the other hand, the New York regulations also, to some extent, a represent a failure on the part of the food industry’s CSR movement to get ahead of the game and work through a suitable industry-led alternative. Nutrition leaflets and website data are all well and good, but they hardly represent a creative and sustainable response to the health issues facing a society in the midst of a rapidly escalating obesity problem. McDonald’s, KFC, Burger King, Pizza Hut and the rest of the usual suspects have been talking the talk well enough, but in the end this wasn’t enough, at least not in New York.

Of course, the interesting question now is what will happen elsewhere, whether in other US states or further afield. Will the New York regulations act as a spur for more states or even countries to legislate? Will the food chains get their act together and instigate more responsible labeling programmes? Will we see new operators entering as-yet unregulated markets with information-led, nutrition-oriented value propositions, just as we have in the packaged food sector? Or, will all the fuss die down leaving fast food corporations free to scupper the new regulations before they have a chance to seriously take hold? The writing is on the wall, for sure. The only problem is, it’s just a little hard to read.

Hello Dr. Crane and Dr. Matten,I have been enjoying reading over your blog, and, having been in Dr. Matten's class, really appreciate your insights and opinions. I don't know if you accept suggestions of topics for discussion, but I would be very interested in your opinions on opportunities for CSR in the Consumer Packaged Goods industry, not just ford, but for example personal hygene or cleaning products. It seems to me that the biggest impact can be achieved through improvements in operations (HR, efficiency in production, use of recycled materials, etc.) and in policies (e.g. no animal testing and the like). Yet, even though most major CPG companies do engage in such sustainable practices, these efforts remain largely unseen by the consumer. How would a CPG company affect its image re: CSR in the eye of the consumer? Is introducing "green products" (i.e. "all natural", "healthy for you and the environment") the solution? What is your opinion on "green"/"organic"/"all natural" rpoducts? Can they be considered an impact on sustainability, or are they just gimmicks? And if "geering" of CPGs is the right way to go, how would a manager make a business case for that? The large CPG corporations seem to hold the view that demand for such products is niche, and does not hold substantial opportunities for scale or profit. How would one make a case for introducing "green" products into the product line of large CPG corporations then?I know this was long, but I am genuinly interested in the issue! Best regards,Polina

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Andrew Crane [L] and Dirk Matten [R]

Welcome to the Crane and Matten blog - for informed commentary and expert analysis on the everchanging world of corporate responsibility.

We are two business school professors from theSchulich School of Businessin Toronto, Canada, best known for our books and research articles on business ethics and corporate citizenship. We've been writing the Crane and Matten blog since 2008, offering unique insight on a range of issues from across the globe.

Andrew Craneis currently the George R. Gardiner Professor of Business Ethics.

Dirk Mattenis currently the Hewlett Packard Chair in Corporate Social Responsibility.